Blueprint of a gear train.

 Robert J. Yarbrough
Patent Attorney

 Patents - Inventions - Trademarks 

Pennsylvania Intellectual Property Forum: 
Advocacy and Lobbying

 Change on a grand scale is sweeping through the U.S. patent system.  In response to a surge in patent applications over the last fifteen years, the U.S. Patent and Trademark Office (PTO) is trying to improve the quality of issued patents and to reduce the time required to process applications.  The changes to PTO regulations are occurring at such a furious pace that the interests of small business are in danger of being trampled.

 In addition, Industrial titans are battling over the soul of the U.S. patent system.  In one corner is the pharmaceutical industry, which is dependent upon a strong patent system to protect immensely expensive and immensely profitable drugs.  In the other corner is the high technology industry, which make and sell highly complex products that may contain tens of thousands of systems and hence tens of thousands of opportunities to infringe someone else’s patent.  The high technology industry, in general, supports a relatively weak patent system that does not stand in the way of selling high-technology products.  Each of these industries has its advocates in the PTO, in Congress, and in whatever administration is in power. 

Small Business and Individual Inventors are Crucial to American Industry

 The interests of the small business and the individual inventor are not a concern to the major players in either the pharmaceutical industry or the high technology industry.  In the battle raging between these major industries, the PTO, the Congress and whatever administration is in power are more than willing to run roughshod over the interests of the small business and individual inventor. 

 Ignoring the interests of individual inventors and small businesses is a serious error.  Historically, individual and small business inventors have provided more than 30% of U.S. patents and have driven innovation in the United States.  Many large companies owe their competitive advantages to patents acquired from small businesses and individuals. 

Our Mission: looking out for the little guy.

 Large businesses have many lobbyists and organizations looking out for their interests before Congress and the PTO.  Individual inventors and small businesses have few advocates in the area of patents.  As operators of small businesses and as attorneys who represent small businesses, we have attempted to carry some of that burden. 

The Problem: PTO fails to consider or disclose the effect of proposed statutes and rules on individual inventors and small businesses.

 Certainly no one is looking out for the interests of the individual inventor or small business at the PTO.  The PTO has taken steps to promulgate rules that will significantly increase the cost and severely affect the ability of individual inventors and small businesses to obtain patent protection.  In so doing, the PTO has made several poor policy choices and ignored the requirements of federal statutes requiring the PTO to assess the impacts of those regulations on small businesses.   Our complaint is specifically that the PTO does not know, and does not care, what the effect of its regulations on small business will be, as required by law, because the PTO has not examined that issue.  We believe that many individual inventors and small businesses may be frozen out of the patent process by PTO rule changes and by the actions of Congress.

What we have done about the problem.

 The following is a brief chronology of our activities relating to PTO rulemakings and bills before Congress.  Members of the Pennsylvania IP Forum have been unstinting in their efforts, all without pay, in pursuing these matters.  We extend a special recognition to Legislation Committee Chair Deborah Logan and Government Relations Committee Chair Stuart Bowie for their tireless work relating to the failure by the PTO to comply with the Regulatory Flexibility Act.

1.    “Changes to Support Implementation of the United States Patent and Trademark Office 21st Century Strategic Plan,” 68 Fed. Reg. 53816 – 53859 (September 12, 2003)

 The 21st Century Strategic Plan rulemaking addressed many provisions of the patenting regulations.  Upon review, we were concerned that many of the proposed changes were not in the interests of individual inventors and small businesses.  We prepared and submitted comments to the rulemaking, which appear here in pdf format and here in html.  A primary concern, which continues to this day, is the tendency of the PTO to rely on inflexible rules to push more of the burden of patent examination onto the applicant, increasing the cost to the applicant. 

 The final rule was published at 69 Fed. Reg. 56481 (September 21, 2004).  In promulgating the final regulations, the PTO adopted some of our recommendations and rejected others.

2.    Failure by the PTO to comply with the Regulatory Flexibility Act, 5 U.S.C. 601-612

 The Regulatory Flexibility Act, 5 U.S.C. 601-612, requires that the PTO analyze whether each proposed rulemaking will affect a significant number of small businesses, evaluate alternatives and publish the factual basis of its determination.   As we reviewed the 21st Century Strategic Plan and three other related rulemakings, we were alarmed that the PTO had utterly failed to comply with the Regulatory Flexibility Act.  The PTO did not know and appeared not to care about the effect of its rulemakings on small business.  We found after reviewing several PTO rulemakings that the PTO routinely certified that its rulemakings would have no significant effect on small business, even though the PTO had no factual basis on which to base its certification. 

 In early 2004, we submitted FOIA requests to the PTO for all information to support its findings of no impact on small businesses of the 21st Century Strategic Plan rulemakings.  The initial PTO responses are attached to this letter.  Supplemental FOIA responses appear here and here.  We were not satisfied by the responses.

 We brought our concerns to the attention of the PTO.  Follow this link to our letter to Jon Dudas of March 17, 2004 in pdf and this link to our letter in html.   Because oversight of the PTO is within the purview of the Senate Committee on the Judiciary, on March 17, 2004 we submitted a letter to Sen. Orrin G. Hatch, then-Chairman of the Committee, and other members of the committee.   Follow this link to our letter to Sen. Hatch in pdf format and this link to our letter to Sen. Hatch in html.   We also scheduled to meet with Thomas Sydnor, Counsel to the Senate Committee on March 24, 2004 to express our concerns in person.

 As a result of our letters and the scheduled meeting, PTO senior staff scheduled a conference telephone call with us to discuss our concerns about PTO Regulatory Flexibility Act compliance.  The conference call was conducted on March 23, 2004.  A memo discussing the telephone call appears here

 On March 24, 2004, we travelled to Washington and met with Tom Sydnor, Counsel to the Senate Committee on the Judiciary.  We expressed our concerns about the PTO’s Regulatory Flexibility Act compliance and about the then-pending patent fee legislation, discussed below.

 Bernard Knight, the PTO attorney who prepared the original certificates of no impact on small business, prepared a letter addressing the conference call and dated March 24, 2004, which appears here.   We did not agree with Mr. Knight’s characterization of the conference call.  Our response of April 5, 2004 appears here in pdf and here in html.

 On April 6, 2004, we notified members of the relevant House and Senate Committees of our continuing concerns and that those concerns were not allayed by the conference call or by the resulting FOIA response.  Our submission to the committee members appears here.

 We were not successful in forcing compliance by the PTO with the Regulatory Flexibility Act for the four rulemakings in question; however, we were successful in brining this issue to the attention of the highest officials in the PTO, the SBA and the relevant Congressional committees.  Our actions are bearing fruit. In at least one recent rulemaking, the PTO is at least going through the motions of Regulatory Flexibility Act compliance.  The PTO's new attention to its statutory obligations appears motivated by its loss in a court challenge to the claims limitation rulemaking and continuation limitation rulemaking, discussed below.

3.    Patent Fee Legislation, H.R. 1561 (2004)

 In 2004, Congress passed fee legislation substantially increasing the fees for patenting while at the same time allowing money to be siphoned from fees collected by the PTO into the general fund.  We were, and are, of the opinion that the fee increases disproportionately affect small businesses.  We believe that the increased fees discourage small businesses and individual inventors from pursuing patent protection. 

 We submitted written comment to the fee legislation to Sen. Orrin G. Hatch and to other members of the Senate and House committees.  Follow this link to our March 17, 2004 letter to Sen. Hatch in pdf format and this link to our letter to Sen. Hatch in html.   As a group, we travelled to Washington and met with Tom Sydnor, a senior staffer to the committee on March 24, 2004.  During the meeting, we presented our concerns about the effect of the fee bill in addition to our concerns about the failure of the PTO to conform to the Regulatory Flexibility Act.

4.   "Exemption to Prohibition on Circumvention of Copyright Protection Systems for Access Control Technologies," 70 Fed. Reg. 57526-57531 (October 3, 2005)

 We also have commented on non-patent matters.  Under the leadership of Lawrence Husick and David Guttman, we responded to a request from the United States Copyright Office for proposals for exemptions from the anti-circumvention provisions of the Digital Millennium Copyright Act.  We proposed an exemption to address the infamous "Sony BMG Music root kit" incident.  In that incident, Sony infected user computers with virus-like software to prevent copying of Sony CD recordings.  We argued that the exemption was necessary to allow malicious software to be removed from computers.  Our comments appears here. Our comment was one of very few accepted by the Copyright Office in its final rulemaking, appearing at 71 Fed. Reg. 68472-68480

5.    “Changes to Practice in the Examination in Patent Cases,” 71 Fed. Reg. 61 (January 3, 2006) (“Claim limitation rulemaking”)

 This rulemaking would limit the number of claims that can be included in a patent application without triggering very expensive requirements.  We were concerned that the rulemaking would substantially increase costs for small businesses and individual inventors, would make patents more difficult to obtain, and would severely limit the options available to inventors. 

 We also were concerned that the PTO had not considered the effects of the proposed rulemaking on small business under the Regulatory Flexibility Act.    We submitted a FOIA request, the response to which appears here.  Our comments to the rulemaking appear here in pdf format and here in html.  See the comments for a more detailed list of our concerns.

 The rulemaking was finally promulgated to go into effect on November 1, 2007.  The rulemaking was subsequently challenged by others in court as outside of the power of the PTO.  The challengers prevailed and implementation of the rulemaking was permanently enjoined by the court. The decision is currently on appeal.

6.    “Changes to Practice for Continuing Applications…,” 71 Fed. Reg. 48 (January 3, 2006) (“Continuation rulemaking”)

 This rulemaking would limit the number of continuation applications that can be filed in a patent application or a related family of patent applications.   We were concerned that the rulemaking would substantially increase costs for small businesses and individual inventors and would reduce the ability of small businesses to protect inventions through patents. 

 We also were concerned that the PTO had not considered the effects of the proposed rulemaking on small businesses under the Regulatory Flexibility Act.    We submitted a FOIA request, the response to which appears here.  Our comments to the rulemaking appear here in pdf.  Our comments are here in html, without attachments.

 The PTO finally promulgated the regulations effective November 1, 2007.  On April 1, 2008 the claim limitation and continuation limitation regulations were struck down as outside the power of the PTO.

 The failure of the PTO Claim limitation and continuation rulemakings apparently is the first time that a PTO rulemaking has been challenged in court and the first time that the PTO has lost a rulemaking.  The PTO appears to be learning from its mistakes.  In at least one subsequent rulemaking (relating to claiming in the alternative) the PTO is at least going through the motions of Regulatory Flexibility Act compliance. 

7.   Nomination of Stuart Bowie to the Citizen's Advisory Committee

 In 2007 the PTO advertised for participants in its public advisory committee.  We nominated our Government Relations Chairman, Stuart Bowie.  Our nomination was not accepted.  Their loss. 

8.    Deferred examination proposal

 In January, 2009 the PTO asked for public comment as to whether the PTO should develop a program of voluntary deferred examination of patent applications.  Deferred examination means that a patent application is not put in line to be reviewed by a patent examiner until the a applicant specifically requests that the application be reviewed.  Deferred examination can be useful to an applicant who wants to maintain 'patent pending' status or who wants to defer the expenses of examination until the value of the invention becomes clear.  Deferred examination also has the benefit of cutting the workload of the PTO. 

 Most but not all of our members support deferred examination.  Our comments appear here in .pdf and here in html.  

 I view the PTO's request for comment as a very hopeful development.  In this instance the PTO solicited the views of the public, which means the views of patent practitioners and inventors, prior to committing to a policy.  This consultative approach is in stark contrast to the approach of PTO management over the last several years.

9.    Patent Reform Act of 2009

 Congress is considering sweeping changes to the patent statute, now an annual occurrence.  The proposed Patent Reform Act of 2009 is part of the steady effort by the oft-sued high tech industry and the generic pharmaceutical industry to weaken U.S. patent protection. The effort is opposed by pharmaceutical companies that develop new drugs, by individual inventors and by others who depend on patents to build their businesses.  Our letter to Senator Specter asking that the Senate proceed slowly and deliberately appears here in .pdf.

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